'Too many unknowns for now,' says Citi and cuts Coinbase to Neutral

Citi analysts downgraded Coinbase Global (NASDAQ: COIN ) shares to Neutral from Buy with the price target of $65 per share, down from the prior $80. The new price target implies just over 20% upside potential for COIN shares from current levels.

The analysts see a lot of regulatory uncertainty surrounding the Coinbase story.

“Clarity could come from: (i) a lengthy legal process vs. the SEC, where the possibility of an operating injunction cannot be ruled out, (ii) long awaited legislative movement amidst a challenging legislative calendar and an upcoming election year, and/or even (iii) Ripple’s ongoing legal process, which could be potentially precedent setting,” they said in a note.

Aside from the regulatory issues, the analysts remain positive on a “category leader and one of the better positioned platforms should broader integration with traditional finance occur.”

“Yet with this position, Coinbase is now tasked to advocate for a reputationally damaged industry and pave a sustainable pathway towards regulatory compliance,” the analysts added.

Hence, Citi analysts would like to see more regulatory clarity before becoming more positive on COIN stock.

Coinbase shares are down 1.4% in pre-market Tuesday.